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President Muhammadu Buhari

By Michael Eboh

All the systems of benefits transfer to oil-producing communities put in place by the Federal Government have over the years, failed to address the exploitation, degradation and deprivation suffered by the communities, according to a report by Centre for Social Studies and Development.

Speaking during a webinar on Precept 5 of the Nigerian Natural Resource Charter, NNRC, Executive Director of the CSSD, also called ‘We The People’, Mr. Ken Henshaw, identified the systems of benefits transfer to oil-producing communities to include the Niger Delta Development Commission, NDDC; Ministry of Niger Delta; the 13 per cent Derivation Fund and Ecological Fund, among others.

Precept 5 of the NNRC, deals with managing local impact and states that the government should pursue opportunities for local benefits and account for, mitigate, and offset the environmental and social costs of resource extraction projects.

However, according to Henshaw, in the area of local benefits, the government superintended systems of benefits transfer to communities, including the NDDC and Ministry of Niger Delta, the 13% derivation fund, and ecological funds, have failed to ensure that communities adequately benefit from natural resource earnings.

He added that while Nigeria’s local content requirements hold great promises for greater benefit transfers to oil-producing communities, its actual application in the oil and gas sector was weak.

He maintained that monitoring the utilization of the 13 per cent Derivation was very difficult because the money is paid directly into the accounts of the various state governments.

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Henshaw argued that while the systems promoted by the government had failed, in contrast, the Global Memorandum of Understanding, GMoU, structures created by oil companies with the participation of the communities were fast becoming the most effective routes for benefit transfers and participation in oil-producing communities.

“Unfortunately, the fact that the agreements are non-binding in many instances, and their implementation discretionary, is a significant weakness,” he noted.

Furthermore, in the area of trust, Henshaw disclosed that while the precepts require that there be meaningful participation of everyone, managing the expectation of the affected communities and avenue for grievance and dispute resolution, its findings revealed that that were are no deliberate and enforceable frameworks created by any tier of government with the goal of ensuring that affected communities participate meaningfully in decision making on resource projects.

He said, “This has meant that the free, prior and informed consent of communities is not sought or obtained. Where efforts are made in this regard, there are discretionary and ‘after the fact.’ The host communities’ component of PIB which could have addressed these gaps and increased trust did not make much progress in the period under review.

“In the area of managing local impact, while Nigeria’s Environmental Impact Assessment, EIA, Act required that project proponent present plans for mitigating adverse impacts of their proposed projects, there is no strong evidence indicating that, in taking decisions over resource projects, the government prefers the option of preventing costs over compensation and minimization of such negative costs.

“In at least one instance, that of routine gas flaring, the government seems more inclined to impose fines and extend flare out targets than to enforce its own flare-out dates. The capacity of government regulatory agencies to enforce sanctions and carry out their functions appropriately is grossly limited, principally on account of capacity and funding constraints.”

However, to address these lags, Henshaw called for the overhaul of benefit transfer mechanisms, like the NDDC and 13% Derivation Fund; strengthening of monitoring agencies like NOSDRA, to do their work effectively and mainstreaming critical issues in the GMOUs and ensuring that they are put into law.

In addition, he advocated the passage of decent Petroleum Industry Bill, PIB, that addresses the concerns of citizens; ensuring benefit sharing mechanisms translate to tangible benefits for people in the region; implementation of the National Petroleum Policy; and engendering trust by ensuring meaningful participation in extractive resource projects, among others.

Vanguard News Nigeria